Integré Partners Press Release:

June 2, 2010

 

Partnering Productively with the Chief Executive Officer

Remarks Presented to the Financial Executives Institute

by Ralph Dieckmann

In the coming months, I will begin my 30th year as an executive search consultant, during which time I have conducted hundreds of searches for CEO's, CFO's, Chief Marketing Officers and many others.  I hope you will permit me a little look over my shoulder to build some perspective for my remarks today.  In the time that I have been active in the business world, we have seen much change.  The playing field has globalized and we have seen raw materials and capital costs retreat to secondary leverage positions as differential human resource costs have driven manufacturing to parts of the world unknown to most business executives as of 1970.  Technologically we have moved from card-readers to the Blackberry. 

And during all these changes, the Chief Financial Officer has evolved through a series of specialist phases, beginning with general accountancy; then to tax guru during the leveraged leasing phase; then to systems designer as computing power escalated; then to merger and acquisition manager as the conglomerates were built; then to cost accountant supreme when the accounting focus turned inside to management reporting; and now is a global risk manager.

WHAT DO CEO'S WANT?

Against this background of considerable change, we need to ask the question, What is it that Chief Executives want?  Admittedly, some still want specialists, but most want a business partner able to forecast and analyze the entire business landscape.

One of the truly brilliant CEO's with whom I have had the pleasure to work is Rolf Huppi, Chairman of Zurich Worldwide.  As he and I collaborated to totally rebuild the senior executive corps of their U.S. operations some years ago, he introduced me to the concept of the conversation partner.  In this scheme, everybody throughout the hierarchy is required to be a conversation partner for the person at the next higher organizational level.  The inference was that every key subordinate would have the intellectual breadth and personal confidence to discuss any business issue - present or future - which might be important to the growth and profitability of the company.  Conversations were held as equals with the understanding that, when consensus could not be achieved, there was still the chain of command.

It takes only a little reflection to understand - if implemented successfully - the intellectual capital throughout the organization can be extraordinary under this paradigm.

DO CEO'S NEED A PARTNER?

Why do Chief Executives - most of whom seem to have considerable ego strength - feel a need for a partner?  There are several real reasons.  First, no one person has all the answers.  Second, it is smart to pilot test an answer before the rollout, even if he or she has made the decision unilaterally.  Most importantly, it can get lonely there in the CEO's office.  The tough decisions all rise to the top, and the CEO is the only person to feel the full impact of outside forces on a really personal basis - issues such as Boardroom tensions, national and local political impacts on the business and so forth.  Plus, there are internal frictions and political factions to confound decision-making.

It becomes clear that a CEO needs a conversation partner, someone he or she can speak with openly and explore alternatives without fear of political repercussion.  And if no one on the inside steps up to fill the role, the general management consultants will move in.  Senior partner friends of mine at major strategy firms tell me that many of their engagements are the result of this conversation partnering role that they play with their clients.  They sell millions of dollars of consulting just because the CEO needs someone to talk to openly!

WHY PARTNER WITH THE CFO?

The Chief Financial Officer is in an excellent position to become the primary confidant of his or her CEO for a number of reasons.  First, numbers tend to neutralize emotions and, because the CFO naturally has an overlapping referee role with the CEO in making asset allocation decisions, there is less apt to be political tension with the CFO than there would be between the CEO and a division executive or a senior sales executive, for example.  In addition, a newly appointed CEO often makes the Chief Financial Officer one of his first team changes - and being first creates a natural alliance - two "outsiders" learning the terrain together, creating a somewhat natural opportunity for partnering.

WHAT ARE THE CRITICAL FACTORS?

There are four elements that seem to be of critical importance in productive partnering.  They are a shared vision of the enterprise, role clarity, value added contributions and a bond of trust.  With regard to shared vision, one must be working toward common goals to release the synergy necessary for partnering.  If you cannot find common ground here with your CEO, send me your resume now because you will not thrive in that specific environment!

You need to find out what the CEO expects from you.  If you do not know, ask!  Lobby for a broadened role if you are unhappy with the definition and understand that mismatched expectations can only lead to a weakened team effort.  Technical mastery will get you accepted as a key subordinate, but no more than that.  The stuff of partnership is playing a role in shaping the business and to truly be adding value, you must be participating at that level.

The three components already highlighted are necessary but not sufficient for a true partnership.  There also must be a bond of trust, which may be granted by the CEO as an act of faith, or, it may evolve over time through exposure and incremental acceptance.  Alternatively, it may be a cathartic experience when you are thrown into difficult decision making during an IPO, a takeover battle, or a merger integration.

HOW DO YOU PARTNER EFFECTIVELY?

Over the years I have watched some financial officers establish strong partner relationships with their CEO's and others fail.  What is it that the successful ones do?  First, they get intimate with the business.  They do not confine themselves to the numbers - they get out, travel in the field and meet customers.  They lunch with their peers and other key managers, not just with the finance staff.  They ask for special project leadership roles.  The result: they have more meaningful business dialogues with their CEO's.

Second, the ones who get ahead are brave and take some risks.  They speak their mind yet stay open to alternative concepts and solutions.  They ask tough questions and they are proactive in interacting with their peers and their boss.  The result: people, including the CEO, understand they are passionate about the business in which they are participating.

Third, successful CFO's stay broad in their outlook.  They take the risk management view first, last and always, scanning every key aspect of the business routinely.  They specifically concentrate on where the action is not - because that is normally where the next problem is brewing.  The result: they are meshing with the CEO's thought process by focusing on future outcomes and maintaining a macro-viewpoint while, at the same time, protecting him or her from developing blind spots.

Fourth, the CFO's with whom presidents want to partner are futurists in their own realm.  They push for better metrics to guide the management decision-making.  Some are developing human asset accounting systems to optimize today's profit differential - the company's people.  The result:  they are now regarded as thoughtful groundbreakers.

Finally - and this perhaps proves that I am really speaking to you as a recruiter - the most effective CFO's build world-class staffs.  They hire people who are not only their intellectual equals; they settle only for people who are broad in their interests yet deeper in their specialty than they are.  And, no wallflowers!  You need a productive debating society to unearth the problems and solve them creatively.  If you can accomplish this task, you will get these results: better technical problem solutions; more teamwork; and, most importantly, the time to truly partner with your CEO in the way Mr. Huppi so brilliantly devised.

 

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